WIS210 FINANCIAL PLANNING & ESTATE TRANSFER OF FAMILY HELD BUSINESS 02/26/1990 07:56 AM D1 327 Lines Agriculture Marketing/Distribution and Retail Services Financial Planning and Estate Transfer of Family-Held Business (5-15days) This unit deals with estate transfers of family-held businesses. Topics include career opportunities, estate planning, taxations, ownership structure and exchanges, insurances, retirement planning, and vehicles of estate transfer. Objectives To acquaint student with employment information and career opportunities in the estate transfer industry To enhance student understanding of the estate planning process and associated team To increase comprehension of estate taxations and the economic changes including death that influence tax rates To introduce factors that determine property values and the use of wills and trusts To assist students in comparing *gift: advantages and disadvantages To acquaint students with various business-related insurance To analyze life insurance types and uses To emphasize the importance of adequate retirement planning To develop an understanding of estate transfer vehicles Competencies At the conclusion of this unit, students will be able to explain current employment information such as job descriptions, job availability, personal and educational requirements, working conditions, opportunity for advancement, and other factors relative to potential employment in the financial-planning industry and relate it to their personal needs and aspirations; understand the importance of estate and financial planning; make decisions about establishing the business structure; evaluate farm real estate and personal property; understand the various types of wills and how they work to increase or decrease estate taxes; effectively use gifts as an estate transfer vehicle; determine the appropriate type and amount of insurance on an individual basis; understand the various types of life insurance and how they can be advantageously used to accomplish the family's goals; plan an adequate retirement plan using IRS-approved tax deductible plans; and discuss estate transfer devices. Subject Matter (Basic skills integration areas are shown in brackets following title.) Careers - Current and future employment needs - Job descriptions - Training requirements - Working conditions - Opportunities for advancement - Other factors The estate planning process [Social Studies] - Establishing objectives - Estate inventory - Choosing the proper methods - Timely reviews and updating The estate planning team [Careers, Social Studies] - Attorney - Life underwriter - Trust officer - Certified public accountant - Self Timetables for planning - First generation - Second generation Estate taxation - Federal estate tax reforms - Wisconsin inheritance tax - Gift tax - Capital gains tax Economic changes [Mathematics] - Inflation - Cash flow - Untimely owner-operator death or disability - Taxation at progressive tax table levels - Income taxes - Death taxes Business structure - Sole ownership - Partnerships - Corporations Self-analysis of potential cash or liquidity problems at death [Mathematics] - Establishing the gross estate - Establishing the adjusted gross estate - Establishing the net taxable estate Tax consequences at death [Mathematics, Social Studies] - Marital deductions - Jointly held properties - Federal tax credits - Federal estate taxes - State inheritance taxes Property values [Careers, Mathematics] - Real estate and building - Personal property - Other valued holding - Fair market value Purpose of wills and trusts - Types - Living trusts - Testamentary trusts - Drafting wills and trusts Advantages and disadvantages of gifts - Purposes Gifts to spouses Gifts to children Gifts to charities - Given properties - Annual exclusion allowance gift - Lifetime gifts - Tax consequences of gifts Purchasing property and casualty insurance on the business [Mathematics] - Insuring to value - Co-insurance - Deductibles - Maximum liability limits Purchasing health and disability insurance [Mathematics, Social Studies] - Policy renewable features - Maximize total coverage - Inflating medical costs - Deductibles Life insurance types and uses [Social Studies] - Term insurance - Permanent insurance Future money concept Investment myth The advantage of the level premium concept in whole life products - Life insurance ownership Taxation avoidance Insurable interest of owner Personally owned insurance versus credit life Survivor life insurance concept for family-owned businesses [Mathematics] - Contract terms - Benefits - Underwriting advantages - Ownership flexibility - Reduced costs - Annual exclusion gifts to third parties to pay premiums Planning an adequate retirement [Mathematics] - Planned liquidation of present assets - Tax deferred plans - Income tax advantages - Funding products Certificates of deposit Mutual funds Stocks and bonds Annuities Estate transfer procedures [Mathematics] - Purchase by land contract Inhibit the inflation problem Lower interest rate Lower down payment Valuation break - Gifts Annual exclusion gifts Tax-free limitations Lifetime gift taxation - Cash purchases Interest rates Down payment requirement Capital gains considerations Motivational Activities Take a field trip to county courthouse. Take a field trip to a local financial institution. Invite resource speakers to address the class. View films, videotapes, and slides on unit-related topics. Learning Activities Complete an estate liquidity analysis on a simulated farm or business. Use a computer to complete the analysis. Create bulletin board displays on topics related to this unit. Use liquidity analysis forms. Visit a Farm Bureau Service Center. Instructional Materials Textbooks and References The Appraisal of Farm Real Estate by Robert C. Suter. 2nd ed. Danville, IL: Interstate, 1980. Available from National Farm Book Company. Estate Planning - The Book for Farmers by Robert C. Suter. Danville, IL: Interstate, 1983. Estate Planning for Farmers by J.W. Looney. St. Louis, MO: Doane Information Services, 1979. Available from National Farm Book Company. Farm Estate and Business Planning by Neil E. Harl. 9th ed. Niles, IL: Century Communications, 1984. Farm Journal's Estate Planning Idea Book by Laura Lane. Philadelphia, PA: Farm Journal, 1978. How to Plan Your Estate by Robert M. Dunaway. 3rd ed. Des Moines, IA: Wallace-Homestead, 1982. Keeping What's Yours: Estate Planning After Tax Reform by J.R. Graham and C.S. Arthur, III. Manhattan, KS: R.L. DeBruyn and Associates, 1977. Bulletins and Pamphlets The following are available from the Cooperative Extension Service. Family Estate Planning in Wisconsin. B1442. Farm Business Arrangements: Which One for You NCR50. Farm Estate and Transfer Planning: A Management Perspective. NCR193. Farm Real Estate. NCR51. Farmstead Planning - Zoning and Regulations Checklist. A2725. How Do Income, Estate and Gift Tax Policies Affect Structure A9N6T143. How Does Inflation Affect Farm Structure A9N7T143. Income Tax Management for Farmers. NCR2. Retirement Planning for Farm Families. NCR49. The following is available from the Wisconsin Women's Council. Wisconsin Marital Property Act Fact Sheet Periodicals Agri-View The Country Today Farm Journal The Farmer Hoard's Dairyman Wisconsin Agriculturist On-line Computer Networks The following are available from Ag Ed Network, AgriData Resources, Inc. Tax Plan as Equity Increases. HS125. Taxing Hedges. EE4210. Tips on Tax Considerations. EE510. Transfer Authorization/Sample. EF4498. Types of Farm Ownership. HS9. Films, Videotapes, and Slides The following are available from the Bureau of Audio Visual Instruction. Anatomy of an Inflation. 04268 (16mm film, color, 27 minutes). McGraw-Hill, 1970. Insurance. 11994 (VHS videotape, color, 20 minutes). PBS Video, 1982. Insurance Needs for a Small Business. 07280 (16mm film, color, 16 minutes). Beacon Films, 1982. Retirement Planning: Thinking Ahead. 11054 (VHS videotape, color, 13 minutes). Coronet, 1985. The following are available from the Media Resources Center. Planning For Retirement. S52211H (VHS videotape, color, 25 minutes). Beacon Films, 1985. Towards Retirement. S38624F (VHS videotape, color, 25 minutes). Washington Film Company, 1981. Your Will and Estate. S52210H (VHS videotape, color, 25 minutes). Beacon Films, 1985. The following is available from Modern Talking Picture Service. Your Estate: Planning With Beneficiaries. (16mm film, color, 30 minutes).